Voices

Europe’s new enclosure: the sky

The enclosure of the commons began several centuries ago in Europe, and alas, continues there in the 21st. This time the object of enclosure isnt land, but the carbon absorption capacity of the atmosphere.

In September I spoke at a conference in Berlin on the state of global
efforts to combat climate change. The conference was groping for a path
beyond the Kyoto Protocol, which expires in 2012 and whose modest
targets for reducing greenhouse gas emissions wont be met. I expected
US-bashing, but most of the European criticism was directed at Europe
itself. A main focus of ire was the European Trading System, in which
governments issue tradable carbon emission permits to polluting
industries.

courtesy Peter Barnes

The European governments that set up the system are doing two things
wrong: first, theyre handing out too many permits, and second, theyre
giving them free to polluters, who raise prices and reap windfall
profits.

In Germany, the big winners have been coal-burning
utilities, and the losers have been nearly everyone else. As one German
steelmaker complained, the utilities get windfall profits, and energy
users get windfall costs. In Britain, the first-year windfall to
polluters was estimated at £1 billion.

Whats going on here, of
course, is a large-scale transfer of wealth triggered by a massive
enclosure of a commons. The commons in this case is the earths
atmosphere, a shared inheritance if there ever was one. Its being
sliced into valuable private property rights that are handed free of
charge to polluting corporations, in rough proportion to their historic
pollution. The more they polluted in the past, the more new wealth they
receive. Not just once, but year after year.

Theres no
defensible rationale for this giveaway; the only reason for it is the
political power of polluting corporations. As Peter Ainsworth, a
spokesman for Britains Conservative Party put it, The problem will
not be sorted out until the market is made to work properly by forcing
firms to bid for their permits instead of being allowed to lobby
government for them free of charge.

America can learn from
Europes early and costly mistakes. Seven northeast states, plus
California, are now designing their own carbon trading systems. These
states can do carbon trading the right way: by making polluters pay for
100 percent of their permits. The windfall created when a previously
free resource is converted into a priced commodity would then be
captured by the public rather than by private corporations. It could be
used for per capita dividends (as Alaska does with oil revenue),
transition assistance to affected workers, communities and businesses,
and investments in clean energy, public transit and the like. Billions
of dollars that would otherwise go to a few corporations would instead
benefit everyone.

It would be a tragic irony if the solution
to climate change included a massive transfer of wealth to corporations
that largely created the problem. This would be like rewarding tobacco
companies with billions of dollars for all the lung cancer they caused
in the past.

There's still time to avoid this 21st century tragedy of the commons, and to use our common atmosphere for
the common good. It will take political courage and leadership in
California, New York and other venues but it can happen. Stay tuned
for updates.

Peter Barnes, a fellow at the Tomales Bay Institute, is the author of Who Owns The Sky? His new book, Capitalism 3.0: A Guide to Reclaiming the Commons, was published on October 15.